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Mad Mail: The Danger of U.S. National Debt

Jim: I'm worried about gold right now. From a historical standpoint, the last time gold was this high was in the 1980s. After that, it retreated and underperformed for nearly 20 years. Also, when it retreats, it seems to move at warp speed! When the economy recovers, do we chuck them or hold for the inflation hedge? --Matt

Cramer says: “We are huge believers of gold being part of every portfolio in some form or another. So I am not going to balk. Is it the right time? We’ve been saying the way to buy gold is on the way down. We, too, fear that sudden decline. This is not the season to own gold. But we have had Eldorado on and we’ve had Agnico-Eagle, and I feel strongly that both of those two companies will reward you. And SPDR Gold Shares below $90, I’d pull the trigger.”

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Cramer: How important is our nation's debt issue? We already have a debt of trillions of dollars, however annual deficit budgets and special government relief programs are now adding to it. Are we headed for a financial disaster? I know this is a very long-term question and the focus seems to be on the immediate, but I would like to hear your thoughts on this. --Dr. T

Cramer says: “Of course, I’m worried about the debt. And not only am I worried about the debt, but I’ve got to tell you that I think that’s one of the reasons why I always want to own a position in gold. When I see this much debt, I say, ‘Wait a second.’ It could be inflationary down the road. So let’s buy some gold now before it gets deflationary.”

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Cramer: When is the last day that institutions and hedge funds buy or sell for their end of quarter window dressing? Does the settlement date matter or the appearance of last day changes matter? Thanks! --Peter

Cramer says: “What matters is this…the government has been known to investigate firms, particularly hedge funds, that bought the last day of a quarter to mark up or move up a position that they already have. So if they have a million shares of something and they take it up a dollar on the last day, the government has subpoenaed tapes and gotten that and nailed those guys. So people tend to mark things up three days before…the last day. Hey, what a coincidence – that’s when the market was still rallying.”




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